Shares of state-run Garden Reach Shipbuilders & Engineers made a weak debut on Wednesday, as the shares listed at Rs 102.50 on NSE, implying 13% discount to its issue price of Rs 118. On BSE, the stock listed at Rs 104, down by nearly 12%. The government had raised about Rs 345 crore from Garden Reach Shipbuilders’ IPO between 24th and 26th September.
Due to lack of investor appetite for its paper, the IPO had been extended to October 1st. Even after this extension, the public offer got a tepid response, and was subscribed about 1.02 times, receiving bids for 2,97,58,920 shares against the total issue size of 2,92,10,760.
Notably, this is the third public offer from government in current financial year 2018-19 after IRCON International and RITES. The firm had fixed a price band of Rs 115 to Rs 118 for its public offering. Garden Reach Shipbuilders & Engineers is a Kolkata-based mini-Ratna company, and is engaged in the production of warships for the Indian Navy and the Coastguard. It comes under the Ministry of Defence.
Many brokerages had advised investors to avoid Garden Reach Shipbuilders’ public , citing weak prospects and average financial performance. “The company is bringing the issue at p/e multiple of approx. 14 on FY18 eps at price band of Rs 115-118/share. Although, company is one of India’s leading public sector shipyards catering to the defence sector but due to weak financial performance (Loss at operating level in FY17 & FY18),co is not looking attractive to deploy the funds in at present level,” HEM Securities had said, adding that it recommends Avoid” on Garden Reach Shipbuilders’ issue.